Covalon receives freedom to operate US opinion letters relating to Covalon's vascular wrap technology and vascular graft coating technology for delivery of Sirolimus

January 16, 2006

Mississauga, Ontario – January 16, 2006: Covalon Technologies Ltd. (Covalon) (TSX Venture: COV) is pleased to announce that it has received favourable US opinion letters relating to product clearance evaluations for Covalon’s vascular wrap technology and vascular graft coating technology for delivery of the antiproliferative drug Sirolimus relative to several US patents.

Covalon’s technologies provide opportunities to develop collagen-based vascular wraps and specially coated vascular grafts that deliver and release Sirolimus for inhibiting scar-tissue formation in hemodialysis vascular access, peripheral vascular disease and coronary bypass grafts.  The products are considered “device” combination products by the FDA and consequently have shorter regulatory and “to market” or commercialization time requirements as compared to “new drugs”.

“This is exciting news for Covalon as it enables the Company to use its proprietary coating and biomaterials platforms to develop products for cardio-vascular applications”, stated Dr. DiCosmo, President and CEO of Covalon.

Covalon’s Sirolimus-eluting graft coating technology and Sirolimus-eluting vascular wrap technology offer combination device products that release the drug at specific locations to impede scar tissue formation that often leads to graft failure in patients with grafts used as access ports for hemodialysis.  In the US the annual incidence of graft failure varies from 30 to 65%, with a mean of 45% . Hospitalizations for treating access-related problems account for 15 to 25% of all hospitalizations for hemodialysis patients and the total annual cost for placement and maintenance of vascular access for hemodialysis was more than $700 million in 2003.

Covalon Technologies Ltd. is a company with advanced medical products that has developed and patented advanced therapeutic biomaterials for wound care and surgical applications and coatings. Polymer chemistry and surface coating technology have been combined to create a range of time-release drug delivery platforms that are applied to many medical devices to treat many critical conditions. A variety of applications for these technologies have been identified and specific products have been developed. The products offer features and benefits providing solutions to many of the problems caused by current devices and their material properties which are used by most medical device manufacturers and suppliers. The problems include infection, poor biocompatibility, and microbial attachment.

For further information please contact: William Jackson, CFO & COO
Covalon Technologies Ltd.
T: (905) 568-8400
F: (905) 568-5200
www.covalon.com

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.  The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this release.

This document contains forward-looking statements. These statements relate to future events or future performance. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue” or the negative of any of these terms or comparable terminology. Such statements reflect the current views of management of the Company with respect to future events. Actual events or results may differ materially. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.